Explaining medical coding

What is Medical Coding? A Simple Explanation

Medical Coding

Medical coding is the process of assigning numeric codes to various types of healthcare diagnoses, procedures, medical services and equipment. Diagnoses and procedure codes are found in documentation like physician notes, lab results, x-rays, etc. Medical coders ensure that the codes are assigned properly for billing; this includes abstracting information from documentation and assigning the appropriate codes for a claim to be paid by insurance.

Why is it necessary to translate diagnoses and procedures into codes?

While this is a valid question, there is a reason why we need to do a double work. If you only listed symptoms, diagnoses and procedures for treatment, and sent them to an insurance company, and wait for the insurer to state which services are reimbursed?

The answer is simple, There will be a large amount of data flow in a hospital for a single patient, and it’s hard to give a precise, clean report on that patient.

For instance, if a patient comes in with a sore throat and is diagnosed with a fever, cold, and finally COVID19 — all of which are noted in their chart– it’s easy for the doctor to track that patient’s progress and submit it to the insurance.

In some other instance, what happens if a patient with a complex injury/sickness comes into the doctor, for example a Type-2 diabetes related ocular impairment? As injuries, conditions, and illnesses get more complex, the amount of data that needs to be conveyed to insurance companies increases significantly. It would cause confusion in the medical record of the patient.

When your data is uniform and clean, research and analysis becomes a whole lot easier and you can more accurately track health trends. Governments and healthcare agencies use this to their advantage for more efficient management.

E.g. – If we want to analyse the prevalence of viral pneumonia, they could look for the latest diagnoses of viral pneumonia by searching for the ICD-10-CM code for pneumonia.

Below is an example of how the complication is managed in medical coding for a diagnosis.

A01 – {Disease}

  • A01.0 {Disease] of the lungs
    • A01.01 … simple
    • A01.02 … complex
      • A01.020 … affecting the trachea
      • A01.021 … affecting the cardiopulmonary system
        • A01.021A … initial encounter
        • A01.021D … subsequent encounter
        • A01.021S … sequela

Types of Medical Codes

Medical coding is a fast-paced profession with thousands of codes that are being updated year-round. The following are some of the most popular types,

  • ICD – Diagnostic codes
  • CPT / HCPCS – Procedure codes
  • SNOMED CT – Medication codes
  • LOINC – Laboratory codes

ICD and CPT/HCPCS codes are playing a major role in connection between the health care providers and the insurance.


The ICD codes(International Classification of Diseases) are originally designed to be a health care classification system, providing diagnostic codes for different diseases. This system includes detailed classifications for illnesses and has been maintained by the WHO. In its simplest term, ICD codes create a universal language for reporting diseases and injury.

We are currently using ICD-11-CM.

ICD codes are numeric or alphanumeric. They have a three-character code that describes the injury or disease, which is typically followed by a decimal point and two to four more characters, depending on the code set, which give more information about the manifestation and/or location of the disease.

Example: U07.1 – COVID-19, virus identified

                  U07.2 -COVID-19, virus not identified


The CPT (Current Procedural Terminology) codes were created by the American Medical Association to group medical procedures into smaller, more manageable categories. For doctors and other healthcare providers, this coding system offers a uniform language for documenting and getting paid for their services.

All CPT codes are five-digits and can be either numeric or alphanumeric. The code’s descriptive text is clinically focused and utilizes common standards to allow a diverse group of users to have a uniform understanding. CPT codes are an integral part of the reimbursement process.

Example : 0001A – First dose, Immunization administration by intramuscular injection of Severe Acute Respiratory Syndrome Coronavirus 2 (SARSCoV-2) (coronavirus disease [COVID19]) vaccine, mRNALNP, spike protein, preservative free, 30 mcg/0.3mL dosage, diluent reconstituted

                0002A – Second dose

                0003A – Third dose

                0004A – Booster dose


The HCPCS (Healthcare Common Procedure Coding System) is pronounced as ‘hick-picks’, developed originally for use by Medicare, Medicaid, Blue Cross/Blue Shield, and other providers to report procedures and bill for supplies.

HCPCS is divided into two levels, Level I and Level II. Level I codes are identical to CPT and are used in the same way. Level II codes describe equipment, medication, and out-patient services not included in CPT.

Example : U0003- Infectious agent detection by nucleic acid (DNA or RNA); Severe Acute Respiratory Syndrome Coronavirus